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Topic: How are you saving for retirement? (Read 4217 times)

With the government now looking at taking away (confiscate) our money out of 401k plans, I was wondering where to hide money for retirement since I don't trust the government to take care of me in old age. http://cspan.org/Watch/Media/2010/10/07/HP/A/39041/Senate+HELP+Cmte+Hearing+on+Retirement+Security.aspx for the redistribution plans. If I hide cash, inflation will eat that up (if they don't collect it up first). Banks will be liable to give info to the government about all accounts. Gold, well might be good if the value stays up, but with the new 1099 rules, they will tax you when you sell it. Any ideas out there?

there aren't very many options. land might be one. if nothing else, it's a tangible asset. buying now is probably a good bet. gems might be another. i think both gold and now silver are out. i expect a gold crash. any way you slice it, it doesn't look good. this next year is going to be really rough. if you have cash and can buy land i can't think of anything better. at least you have a place to squat in your old age. :-D

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.....The greatest changes occur in their country without their cooperation. They are not even aware of precisely what has taken place. They suspect it; they have heard of the event by chance. More than that, they are unconcerned with the fortunes of their village, the safety of their streets, the fate of their church and its vestry. They think that such things have nothing to do with them, that they belong to a powerful stranger called “the government.” They enjoy these goods as tenants, without a sense of ownership, and never give a thought to how they might be improved.....

I've got an aim at doing things to reduce the need for cash - 1 a good garden. Maybe some livestock (chickens, goats, ducks, etc.) 2 pay off whatever possible 3 get off the "grid" (produce power at home). I suppose if things improve, those things make it easier to put away cash, if things get worse (confiscatory taxation), cash isn't as important anymore. I know you need cash for most of that, but it makes room to put a lot more money away later.

Land is a good option, but those too might be seized by our government one day. And you have to pay taxes on raw land, and if you rent it out, like houses, it will get tore up. When you go to sell, there is no telling where capital gains taxes will be (50% or better?). Gems are in the same boat as gold. Raw cash is losing value every day. Think about what a dollar could buy just 10 years ago and not today.

but, taxes on unimproved land are generally much lower than taxes on improved land. rentals can be a PIA, but they bring in income and give you tax write offs. they also are a good bet right now because all those folks losing their homes have to live somewhere. if you can pick up a foreclosures way under market value, you have pretty good odds of not losing money. in the next couple of months there will be floods of foreclosed homes hitting the market again. you probably have a 6 month to 1 year window if nothing changes to pick up foreclosures when they flow again. banks are going to want to dump them quickly.

one mans tragedy is anothers gain. it land was ever on your radar, this is the time.

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.....The greatest changes occur in their country without their cooperation. They are not even aware of precisely what has taken place. They suspect it; they have heard of the event by chance. More than that, they are unconcerned with the fortunes of their village, the safety of their streets, the fate of their church and its vestry. They think that such things have nothing to do with them, that they belong to a powerful stranger called “the government.” They enjoy these goods as tenants, without a sense of ownership, and never give a thought to how they might be improved.....

doesn't work. they have closed the loop holes and threatened the overseas banks so that you can't really do it. one way is to work out of the country most of the year. then you get to keep a huge hunk of your money tax free.

you might consider investment in foreign currency or companies. there are some international funds that might do it for you. China and India have good opportunities :-D

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.....The greatest changes occur in their country without their cooperation. They are not even aware of precisely what has taken place. They suspect it; they have heard of the event by chance. More than that, they are unconcerned with the fortunes of their village, the safety of their streets, the fate of their church and its vestry. They think that such things have nothing to do with them, that they belong to a powerful stranger called “the government.” They enjoy these goods as tenants, without a sense of ownership, and never give a thought to how they might be improved.....

Land is a good option, but those too might be seized by our government one day. And you have to pay taxes on raw land, and if you rent it out, like houses, it will get tore up. When you go to sell, there is no telling where capital gains taxes will be (50% or better?). Gems are in the same boat as gold. Raw cash is losing value every day. Think about what a dollar could buy just 10 years ago and not today.

I think if it comes to that, then retirement will fall way way down the priority ladder.

Buy ammo...the only think that keeps increasing in value since the election.

Scott

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"In the first place, we should insist that if the immigrant who comes here in good faith becomes an American and assimilates himself to us, he shall be treated on an exact equality with everyone else, for it is an outrage to discriminate against any such man because of creed, or birthplace, or origin. But this is predicated upon the person's becoming in every facet an American, and nothing but an American...There can be no divided allegiance here. Any man who says he is an American, but something else also, isn't an American at all. We have room for but one flag, the American flag...We have room for but one language here, and that is the English language...And we have room for but one sole loyalty and that is a loyalty to the American people."

.....The greatest changes occur in their country without their cooperation. They are not even aware of precisely what has taken place. They suspect it; they have heard of the event by chance. More than that, they are unconcerned with the fortunes of their village, the safety of their streets, the fate of their church and its vestry. They think that such things have nothing to do with them, that they belong to a powerful stranger called “the government.” They enjoy these goods as tenants, without a sense of ownership, and never give a thought to how they might be improved.....

you have two classes of assets to invest in... financial assets and real assets.

which or what combination you might choose to invest in would be highly determined by your expectation of what future events might bring...

if you expected a high inflationary environment then real assets (like real estate) is the place you would want to stow value.. when inflationary pressure gets totally out of hand folks convert anything that looks like cash as quickly as possible into some real asset (in Mexico not that long ago you could notice folks converting cash into bricks, wood or even singular bags or concrete as a hedge).

if you expected lower inflation pressure then financial assets offer the opportunity for leveraging your position and enhancing total returns.

strategically some folks prefer diversification and some like the idea of putting all of one's eggs in one basket (thereby making the eggs easier to watch).

JP writes:If it ever got to the point where government tried to seize land you will see a revolt unprecedented in our lifetimes.

tecumseh:well the so called conservative supreme court said it was ok. why ain't ya' tight with that? the Texas Ranger** did exactly what you described to obtain the property for their current stadium... I didn't see much protest there.

allenf writes:With the government now looking at taking away (confiscate) our money

tecumseh:the confiscation has been taking place for quite some time now and the shell game is sufficiently sophisticated that it is well understandable why folks are just now becoming aware that there is no pea under any of the shells. distractive and vague rhetoric (like the words socialism* and such) are excellent mechanisms to keep some folks from ever noticing that the shell game has long been rigged in someone else's favor.

*I often times suspect that most folks would have a difficult time giving you a good solid definition of emotionally loaded words like socialism (or even say some fairly common words like freedom or liberal which also have been loaded up emotionally in recent times)

**GW Bush did seem to profit significantly from this public taking of property by the government to enhance the $ of another private group of folks (the private owners of the Texas Rangers). when the dirty deed was done mr bush 1% original ownership in The Rangers was expanded to 3%. everything has it's price... don't ya' know?

In 2008, I was concerned about the "full faith and credit" of the US government, not to mention all the banks. That risk was very high then, and is down considerably now. But if you are still worried about that, then get out of stocks, bonds, banks and US dollars. And if all those crash, real estate will too. Doesn't leave much. Gold was a good bet in 2008, but still hard to predict. It didn't go up when it should have, it was significantly delayed. I am no expert in gold, but I watched the fundamentals for a short while, and gold doesn't seem to perform like it should. On the other hand, I saw that in the UK water market, the stock price was woefully behind well-known fundamentals. I just wouldn't expect that in gold. But I'm not a stock analyst so I shouldn't be extrapolating.

For my money, at the very least we should diversify assets, pay down as much debt as possible, and watch our banks' stability. If it's offering low interest rates, that's a good thing. High rates that just went down, watch out! Check this site periodically to make sure your bank is not on the Unofficial Problem Bank List (sortable by clicking on headings): http://calculatedriskimages.blogspot.com/2010/10/unofficial-problem-bank-list-october-1.htmlI told my Aunts that their bank was on this list, and they didn't listen. Then it failed.

If you have a lot of money in banks, use the FDIC's EDIE to make sure you are fully insured. Your insurance rises by using multiple accounts with different vestings (ownership types, eg. Individual, Joint, In Trust For/Pay on Death, etc).https://www.fdic.gov/edie/index.html

there aren't very many options. land might be one. if nothing else, it's a tangible asset. buying now is probably a good bet. gems might be another. i think both gold and now silver are out. i expect a gold crash. any way you slice it, it doesn't look good. this next year is going to be really rough. if you have cash and can buy land i can't think of anything better. at least you have a place to squat in your old age. :-D

Like roy rogers said. land its the only investment they ain't making any more of

The first step in our retirement will be to find a place we can afford to live. With the recession and all, the assessed value of our house fell and we thought we'd get some relief on our property taxes. No luck, the County turned right around and raised the value of the land to compensate. Our sales tax is almost 10% (9.5-9.8 depending on area).

There is an "excise tax" (income tax) on the ballot for November. Supposedly for the folks who make over $200K a year ($400 for a couple). But it opens the door for the rest of us later. I'm really hoping it fails.

an AliciaH snip:With the recession and all, the assessed value of our house fell and we thought we'd get some relief on our property taxes. No luck, the County turned right around and raised the value of the land to compensate. Our sales tax is almost 10% (9.5-9.8 depending on area).

tecumseh:I think you comment points to two current underlying real problems in how we pay for government. paying for state government now depends on consumption (sales tax) and state and local governments are highly dependent on the price of real property to constantly rise. I suspect sales tax rates above 9% is inelastic (which basically means you can continue to raise the rate, but gross receipts is stagnant or fall).

taxes (local, state and federal) have not always been structured in this manner.

Alicia, i saw that income tax for you guys. boy, i hope you don't do that, but WA is like OR. the city folks never saw a tax they didn't like! i'd rather we had a sales tax than an income tax, but i know we won't be able to do the switch. property taxes come next month and i dread the bills! we expanded our social welfare programs and raised minimum wage when things were good, and now they want to spend more to "help people" because things are bad.

i'm beginning to understand "Let them eat cake!".

Logged

.....The greatest changes occur in their country without their cooperation. They are not even aware of precisely what has taken place. They suspect it; they have heard of the event by chance. More than that, they are unconcerned with the fortunes of their village, the safety of their streets, the fate of their church and its vestry. They think that such things have nothing to do with them, that they belong to a powerful stranger called “the government.” They enjoy these goods as tenants, without a sense of ownership, and never give a thought to how they might be improved.....

tecumseh:I think you comment points to two current underlying real problems in how we pay for government. paying for state government now depends on consumption (sales tax) and state and local governments are highly dependent on the price of real property to constantly rise. I suspect sales tax rates above 9% is inelastic (which basically means you can continue to raise the rate, but gross receipts is stagnant or fall).

Interesting, hadn't thought about it but now I agree that sales tax rates above 9% are probably inelastic IF people can buy elsewhere. California sales tax on cell phones is horrible, somewhere in the 20% range. I now make sure to buy everything from Ohio (where I live, so it's legal, but I am in California a lot). However, if I lived in California, I'd be stuck with it. So the elasticity of sales tax is a function of place and the underlying product...and maybe some other stuff.

My county government gets almost 38% of its general fund revenue from sales tax, and something like 75% of its sales tax came from car sales, before the recession. Now I understand why the lights are timed to make me stop in front of those stupid dealerships. When car sales died, so did the county's revenue. Of course, property taxes are also a big source of revenues. So if property values go down, governments have to make up the difference by raising rates (or perhaps mills?).

Alicia, i saw that income tax for you guys. boy, i hope you don't do that, but WA is like OR. the city folks never saw a tax they didn't like! i'd rather we had a sales tax than an income tax, but i know we won't be able to do the switch. property taxes come next month and i dread the bills! we expanded our social welfare programs and raised minimum wage when things were good, and now they want to spend more to "help people" because things are bad.

i'm beginning to understand "Let them eat cake!".

As much as I pick on Alabamans - They're really nice people and have a beautiful state, sadly for them, they also have a 9.??% sales tax AND a state income tax.

Alicia, i saw that income tax for you guys. boy, i hope you don't do that, but WA is like OR. the city folks never saw a tax they didn't like! i'd rather we had a sales tax than an income tax, but i know we won't be able to do the switch. property taxes come next month and i dread the bills! we expanded our social welfare programs and raised minimum wage when things were good, and now they want to spend more to "help people" because things are bad.

i'm beginning to understand "Let them eat cake!".

As much as I pick on Alabamans - They're really nice people and have a beautiful state, sadly for them, they also have a 9.??% sales tax AND a state income tax.

Parts of Louisiana pay 10% Sales tax as well as income tax and we are last in everything good. We lead the list in teen preg. crime and high school drop outs. Perfect example of throwing money at the problem will not fix the problem just make the problem bigger

You have only one real option and that is tangible assets and avoid currencies. Think of things that never will lose importance or value and will always be needed or wanted, like gold, land and hopefully bees. These are your most secure investments that will hold value against inflation and if you can sell them for cash or trade for what you want in your retirement, all the better.

There is no way out of the financial position this county is in. It does not matter if we cut spending, raise taxes, lower taxes or anything else short of getting rid the source of the problem which began in 1913 on Christmas eve.

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The moment a person forms a theory, his imagination sees in every object only the traits which favor that theory

tshnc writes:tecumseh, can you please elaborate or rephrase as I don't follow?

tecumseh:certainly...

first let me say I sped read the paper so my understanding of it content is not through or absolute. I think you will quite understand what I am suggesting here???

there is a graft of stock prices over time adjusted for inflation that presents the general idea that stock is a not such a good investment for folks. if you did the same analysis but lagged the time line by 1 decade the outcome would be vastly different. the author's analysis of what determines stock price is proper as far as I can tell.

I should say that the general message of the link I do very much agree with and is excellent advice for the individual. having stated this personal bias (somewhat defined during my time as a banker and watching closely who failed and who succeeded in $ denomination)..... the austrian school does themselves very much a disservice by suggesting what applies in the micro sense also applies in the macro sense. their 'often snipped' simplistic examples are fraught with this flaw.

I should say that the general message of the link I do very much agree with and is excellent advice for the individual. having stated this personal bias (somewhat defined during my time as a banker and watching closely who failed and who succeeded in $ denomination)..... the austrian school does themselves very much a disservice by suggesting what applies in the micro sense also applies in the macro sense.

So if I understand you correctly, you are saying that at an individual level it is a good idea to a) invest in yourself (education and your ability to produce) b) to invest in consumables (avoids the inflation tax) and c) invest in real goods (with any surplus beyond a and b)?

So if this is good advice for the individual, why would it be a bad thing (or flawed as you say) for larger society to do the same?

yes to your questions, although 'real' assets might need a bit of fleshing out (ie stock are real assets).

I guess I could reduce my feeling to a question tshnc....

have you ever notice that some folks that make very little money acquire quite a large nest egg over their lives and that some folks that make huge salaries seem to acquire little beside whatever is the current fad and a large debt?

when too many folks start doing 'the right thing' the collective (the sum of) becomes 'the wrong thing'. you 'should' hope for a wide/diverse response to any perceived problem. when everyone follows one path almost always the end results is absolutely contrary to what you though the results would be.

a simple question might be to you.... what would be the immediate and ultimate results (effect) if everyone followed the author's advice?

there is a large difference in thinking in regards to micro vs macro economic thinking (theory I would guess some might call it) and anyone (claiming some economic expertise) that intermixes the two is most time walking on pretty thin ice (intellectually) or trying to promote some agenda (and yes most time hidden). this flaw is thinking is quite evident when you are trying to have some discussion with how money and banking works. this flaw becomes a dead give away that some folks thinking is extremely shallow and is highly likely to have been totally prompted by someone' else thinking. some folks would do just as well to brand themselves with the word NAIVE across their forehead.... in bright day glow colors of course.

As a share of stock represents a claim against future profits of a company, I do not consider it a "real asset".

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have you ever notice that some folks that make very little money acquire quite a large nest egg over their lives and that some folks that make huge salaries seem to acquire little beside whatever is the current fad and a large debt?

Absolutely, my guess is that those people that acquired a large nest egg lived below their means and likely avoided taking on very much debt.

Honestly I am not sure that it matters for me to figure out what would happen if everyone took the authors advice (assuming it is correct for the individual) as clearly that will never happen. We pretty much know that smoking is bad for you, and yet lots of people still choose to smoke. tecumseh, do you have an opinion about what would happen if "everybody" took the advice of the author?

Tecumseh, lastly can you give me a specific example of an Austrian economic principle that you view as naive? I would very much appreciate a specific example as it is very hard to know if I agree with what you are saying as it is a broad generalization (may or may not be true).

well first tshnc I don't think anyone I know in economics or finance or business school would go along with the notion that a stock is not a real asset. that is a pretty ridiculous statement. this also seemed to be the author your referenced notion?

actually stock prices are based upon the EXPECTATION of future earnings.

a large tim snip followed by (<) tecumseh response...Absolutely, my guess is that those people that acquired a large nest egg lived below their means and likely avoided taking on very much debt.

<living reasonable maybe, but debt yea or nay has little to do with it. the folks generally acquire real assets that appreciate and consume only what they could afford. if you purchase the right kind of assets borrowing or not borrowing has little to do with the end results. debt does allow you to leverage equity in the acquisition of assets. leverage being one of those concepts (in business there are two kinds) that can yield you great rewards.

Honestly I am not sure that it matters for me to figure out what would happen if everyone took the authors advice (assuming it is correct for the individual) as clearly that will never happen. We pretty much know that smoking is bad for you, and yet lots of people still choose to smoke. tecumseh, do you have an opinion about what would happen if "everybody" took the advice of the author?

<what happens when everyone decides times are tough and it is time to horde assets such as cash and spend nothing? hording assets may make sense for the individual firm but the net effect of lot of folks following the same strategy leads to a deeper and deeper economic hole they are collectively digging. keynes suggest this behavior was the bases of his liquidity trap*. just casually it appear that his hypothetical suggestion to what went wrong then may still be in play today. almost always (there must be exception for sure) this one size fits all strategy leads to result just the opposite (contrary) of what folks initially though. contrarian investment thinking is based on this same notion.

<everyone should smoke, it would reduce the mean life span and possible save social security and put a lot of $ into the state and federal coffers. obesity will likely accomplish the same end (less the tax $ generated).

Tecumseh, lastly can you give me a specific example of an Austrian economic principle that you view as naive? I would very much appreciate a specific example as it is very hard to know if I agree with what you are saying as it is a broad generalization (may or may not be true).

<agreeing with me is unimportant. having a bit fuller understanding of how things work economically is really more my objective.

<I didn't say any of the austrian folks were naive. I said when someone (anyone) confuses terms, like how money is created or that money is the exact equivalent of wealth, that their notion of how the system works is naive or simplistic (but most times just incorrect).

<the easiest method to confuse the lay is to intermix ideas like micro and macro economics and suggest that they are one and the same with the objective to come to some predetermined end.

<as far as the Austrian School most folks versed in the the study of economics think the Austrian School will get you no where. there thinking is very dated and static. that the school bias is on 'the subjective nature of value' and not 'object value oriented' should tell you something. in more recent time some of their ilk have made an attempt at being quantitative (which I think went against some of the original Austrian school thinkers) but invariable they have to jump thru some pretty ridiculous hoops to get to the conclusion that they made before they collected their data. determining the answer before the question is asked or the data is collected is by most considered to be academically dishonest.

*this statement by Keynes was stated by Keynes as 'this is how it could of happened' and not 'this is how it happened'. it was a hypothetical answer to why classical economic theory was not working. Keynes was (by most measure) a real egotist and elitist for certain. He was clever enough to not only explain how the system worked but could devise in his mind an explanation as to why it did not.

Maybe you should broaden your horizons relative to the people you "know in economics or finance or business school". Try googling "real asset" and "financial asset". It isn't just the author of the paper I referenced that has this "notion". It is a broadly held one. Financial assets are instruments like cash, bonds and STOCK; they are not REAL ASSETS like land, commodities, manufacturing plants, etc.

And to your point regarding the liquidity trap, you seem to be arguing for the "Paradox of Thrift". Let's just say that I don't buy into the Paul Krugman view of the world. In your example I would encourage you to substitute the word "saving" for "hoarding". Collectively we must repair our "individual" balance sheets (i.e. "save" and pay down our debt), if we want to have the capital needed to create wealth (an increase in production).

tim writes:Maybe you should broaden your horizons relative to the people you "know in economics or finance or business school". Try googling "real asset" and "financial asset". It isn't just the author of the paper I referenced that has this "notion". It is a broadly held one. Financial assets are instruments like cash, bonds and STOCK; they are not REAL ASSETS like land, commodities, manufacturing plants, etc.

tecumseh:I will google the two terms. Just a casual question concerning the last sentence. Since a stock is a share in some business why would 1 share in some manufacturing plant not be a real asset?

I am trying to visualize a balance sheet (items on the asset side are listed based on liquidity) and it seems to me that the first category of assets are called liquid assets which includes cash (and near cash). Following this is financial assets and then (at the bottom and left hand side of the ledger) real assets.

basic investment theory is often presented as a choice between cash* (produces no income but is highly liquid) and then between financial assets vs real assets.

*cash is generally thought to be held for two purposes which are 1) to be capable of respond to unknown events and or casualty and 2) take advantage of unexpected investment opportunity.